What New Canadians Need to Know About Homeownership

Buying a home in Canada is easier than you might think!

Navigating a real estate market in a new country can be overwhelming and can lead new Canadians to assume that homeownership in this country is out of reach. However, with a little planning and the right advice, it is actually very attainable, even with just five per cent down payment.

Daniel Natareno, a mortgage agent with Mortgage Intelligence, a national brokerage firm in Canada, offers up some advice for new immigrants looking to purchase a home in Canada.

The biggest challenge that new Canadians interested in homeownership may face comes from a lack of understanding of the process. Newcomers often rely on information passed along from friends and family who immigrated years prior and their advice could be incorrect, irrelevant or outdated.

It is common for new immigrants to think that their status will require them to incur more fees. In fact, the costs for new Canadians to buy a home typically do not differ much from those of current permanent residents.

Like all other homebuyers, new Canadians will need to pay legal fees, disbursements, land transfer taxes, appraisal fees and title insurance fees when they purchase a home. And with respect to the down payment required, qualified new immigrants can purchase with as little as five per cent down.

To be approved for a mortgage, new Canadians will need sufficient savings and proof of stable employment. They will also have to provide either:

A satisfactory International Credit Report
OR

12 months of bank account history with a Canadian financial institution that proves satisfactory rent payments (or a letter from a landlord) and 12 months’ worth of utility bill statements that demonstrates adequate payments

If the borrower is not able to provide either of these two requirements, they may still be able to purchase with a larger down payment.

There are several tools that can help new Canadians achieve their goal of homeownership. Genworth Canada’s New to Canada program assists eligible residents (who relocated to Canada within the last five years) in purchasing a home with as little as five per cent down. New Canadians may also be eligible for the federal government’s First-Time Home Buyers’ Tax Credit.

To make the most of any available assistance or benefits, it’s important for new Canadians to understand what’s needed.

“I truly think the biggest challenge is not understanding the documentation requirements needed to qualify for a mortgage under the programs available for new Canadians,” Natareno says. “Like anyone else, they need to look at obtaining a mortgage pre-approval and understand the requirements to see if they qualify for a mortgage. There are very specific guidelines under the new-to-Canada programs. That’s why it’s important to speak to an experienced mortgage professional who is very familiar with these programs, particularly since there are usually no exceptions to the rules and some are easily misinterpreted.”

A conventional mortgage in Canada normally requires a down payment of at least 20% of the purchase price. When homebuyers have less than 20% for a down payment, Mortgage Insurance allows them to secure a mortgage for their home purchase.